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2020 (9) TMI 294
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....ic Credit Ledger. A1. That this Hon'ble Court may be pleased to issue an appropriate a Writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India to set aside the order of rejection of refund dated 01.08.2019 passed by the Deputy Commissioner, CGST, Mundra Division. B. That this Hon'ble Court may be pleased to issue an appropriate a Writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India, ordering and directing the respondents that in case there is no rule for SEZ refund then rule(s) for granting refund of unutilized IGST credit lying in Electronic Credit Ledger be framed to bring parity in refund under section 54 for all inverted tax structure suppliers and to remove financial hardship faced by genuine exporters like the petitioner. C. And pass such further order/orders for granting relief(s) as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case to meet the ends of justice." 3. The petitioner a limited company has filed this petition t....
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....er, during the course of personal hearing held on 23rd July, 2019 submitted written submissions in Form-GST RFD-09. Respondent no.3-Deputy Commissioner, Central GST Mundra Division however, passed an order dated 1st August, 2019 rejecting the refund claim of Rs. 99,05,156/- in GST-FORM RFD-06 on the grounds mentioned in the show cause notice rejecting the written submissions filed by the petitioner. 7. The petitioner therefore, being aggrieved has filed this petition with the aforesaid prayers. 8. Learned advocate Mr. Anandodaya S. Mishra for the petitioner submitted that the petitioner is entitled to refund of the unutilized ITC distributed by ISD as section 16 of the CGST Act provides for input tax credit charged on any supply of goods or services or both by the supplier which are used or intended to be used in the course or furtherance of the business of the petitioner. 9. Learned advocate Mr. Mishra relied upon the provisions of section 2(61) of the Central Goods And Service Tax Act,2017 (for short 'CGST Act') which defines "input service distributor" which means that an office of the supplier of goods or services or both which receives tax invoices issued under sectio....
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....ries Through partner Veljibhai Virjibhai Ranipa v. Principal Commissioner of Customs rendered in Special Civil Application No.20126/2018 on 27th June, 2019, wherein in similar facts, this Court allowed the claim made by the petitioner for refund of the IGST in case of an export unit. 14. It was therefore, submitted that in view of the aforesaid decision, the petition is required to be allowed by directing the respondents to grant refund of ITC of Rs. 99,05,156/- lying in Electronic Credit Ledger of the petitioner. 15. On the other hand, learned Standing Counsel Mr. Ankit Shah for the respondents vehemently opposed the petition. Mr. Shah relying upon the averments made in affidavit in reply submitted that the petitioner is not entitled to claim refund of the IGST which was distributed by ISD. 16. Learned advocate Mr. Shah also raised a preliminary objection that the petition is not maintainable as alternative remedy of filing an appeal before the appellate authority is available to the petitioner under the provisions of section 107 of the CGST Act. It was submitted that the petitioner could not have by-passed the appellate authority without any justifiable grounds and there....
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....16 (1) (b) of Integrated Goods and Services Tax Act, 2017 supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit is considered as "Zero rated Supply". The relevant Section states as under: 16(1) "zero rated supply" means any of the following supplies of goods or services or both, namely: (a) ------- (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. Thus, as per Section 16(1) of the Integrated Goods & Services Tax Act, 2017 the supply of goods and / or Service to a SEZ unit i.e. petitioner in this case, is ZERO RATED. Thus, the petitioner being a SEZ unit was not eligible for Refund under Section 54 of the CGST Act, 2017. 7.3 Further, Section 16(3) of Integrated Goods and Services Tax Act, 2017 prescribed the options under which a registered person becomes eligible for claim of refund. The relevant Section states as under : 16(3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely: (a) he may supply goods or services or both under bond or Le....
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....s and Services Tax Rules, 2017 deals with granting of the refund to the assessees. Sub-rule 1 of Rule 89 is reproduced as under: 89. Application for refund of tax, Interest, penalty, fees or any other amount. (1) Any person, except the persons covered under notification issued under section 55, claiming refund of any tax, interest, penalty, fees or any other amount paid by him, other than refund of integrated tax paid or} goods exported out of India, may file an application electronically in FORM GST RFD-01 through the common portal, either directly or through a Facilitation Centre notified by the Commissioner : Provided that any claim for refund relating to balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49 may be made through the return furnished for the relevant tax period in FORM GSTR-3 or FORM GSTR-4 or FORM GSTR-7, as the case may be: Provided further that in respect of supplies to a Special Economic Zone unit or a Special Economic Zone developer, the application for refund shall be filed by the (a) supplier of goods after such goods have been admitted in full in the Special Eco....
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....uine refunds after implementation of GST from 1st July, 2017 has issued Circular No: 17/17/2017GST dated 15.11.2017 for manual filing and processing of refund claims in respect of zero-rated supplies and Circular No.: 24/24/2017-GST dated 21.12.2017 for manual filing and processing of refund claims on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger. However, the Refund claimed by the petitioner cannot be processed under any of the category of eligible Refunds Specified under Manual Refund Processing Circular No.: 17/17/2017-GST dated 15.11.2017 and Circular No.: 24/24/2017-GST dated 21.12.2017 and accordingly, the refund claim is rightly rejected vide the impugned order. 7.8 Further, it is to submit that neither any Notification nor any circular or guidelines have been issued by the Government/Central Board of Indirect Taxes and Customs providing guidelines for processing of Input Tax Credit Refund claims filed by the units located in the Special Economic Zones, in respect of Tax Paid on inward supplies. Therefore, in absence of any circular/ Notification /relevant guidelines to process Input Tax Credit Refund claims of units....
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....ted, in Satyawati Tondon case, Hon'ble Supreme Court has held that with regard to alternative remedy the same has to be construed strictly when it comes to cases pertaining to taxes, CESS etc. To put it otherwise, fiscal laws in general." 18. Relying on the aforesaid averments, it was submitted by Mr. Shah that the petitioner is not entitled to refund of the ITC as the petitioner is an SEZ unit and all supplies to such unit is a zero rated supply as per section 16(1) of the IGST Act and as such, only the supplies of goods or services or both to SEZ developer or SEZ co-developer or SEZ unit is eligible for claim of refund and there is no provision for granting of refund to the SEZ unit in the IGST Act, 2017 except the procedure prescribed under section 16(3) of the IGST Act. It was therefore, submitted that in view of the provision of section 54 of the CGST Act read with Rule 89 of the Central Goods and Service Tax Rules,2017 (for short 'CGST Rules') only a supplier of goods or services can file an application for refund and not recipient of the services. As in the facts of the case, the petitioner is a recipient of service; the petitioner is not entitled to get the refund under ....
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....ipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or installments, the registered person shall be entitled to take credit upon receipt of the last lot or installment: Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereo....
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....o-rated supplies made without payment of tax; (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council: Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty: Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies. Xxx" Integrated Goods Service Tax Act,2017 16. (1) "zero rated supply" means any of the following supplies of goods or services or both, namely:- (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. (2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax....
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....- (a) the recipient of deemed export supplies; or (b) the supplier of deemed export supplies in cases where the recipient does not avail of input tax credit on such supplies and furnishes an undertaking to the effect that the supplier may claim the refund. Provided also that refund of any amount, after adjusting the tax payable by the applicant out of the advance tax deposited by him under section 27 at the time of registration, shall be claimed in the last return required to be furnished by him. Explanation.- For the purposes of this rule- (i) in case of refunds referred to in clause (c) of sub-section (8) of section 54, the expression "invoice" means invoice conforming to the provisions contained in section 31; (ii) where the amount of tax has been recovered from the recipient, it shall be deemed that the incidence of tax has been passed on to the ultimate consumer. (3) Where the application relates to refund of input tax credit, the electronic credit ledger shall be debited by the applicant by an amount equal to the refund so claimed. (4) In the case of zero-rated supply of goods or services or both without payment o....
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....er has availed the benefit of the Government of India, Ministry of Finance, notification No. 48/2017-Central Tax dated the 18th October, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), vide number G.S.R 1305 (E) dated the 18th October, 2017, refund of input tax credit, availed in respect of other inputs or input services used in making zero-rated supply of goods or services or both, shall be granted. (4B) Where the person claiming refund of unutilised input tax credit on account of zero rated supplies without payment of tax has - (a) received supplies on which the supplier has availed the benefit of the Government of India, Ministry of Finance, notification No. 40/2017Central Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1320 (E), dated the 23^rd October, 2017 or notification No. 41/2017Integrated Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1321(E), dated the 23rd October, 2017; or (b) availed the benefit of notification ....
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....shall make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed. If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined will have to be credited to the Fund referred to in Section 57 of the CGST Act, 2017. 26. Rule 96 of the CGST Rules provides for a deeming fiction. The shipping bill that the exporter of goods may file is deemed to be an application for refund of the integrated tax paid on the goods exported out of India. Section 54 referred to above should be read along with Rule 96 of the Rules. Rule 96(4) makes it abundantly clear that the claim for refund can be withheld only in two circumstances as provided in sub-clauses (a) and (b) respectively of clause (4) of Rule 96 of the Rules, 2017. 27. In the aforesaid context, the respondents have fairly conceded that the case of the writapplicant is not falling within sub-clauses (a) and (b) respectively of clause (4) of Rule 96 of the Rules, 2017. The stance of the department is that, as the writ-applicant ....
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....ns. 5. Learned counsel for the assessee on the other hand submitted that once the circular has been issued it is binding on the revenue authorities and even if it runs counter to the decision of this Court, the revenue authorities cannot say that they are not bound by it. The circulars issued by the Board are not binding on the assessee but are binding on revenue authorities. It was submitted that once the Board issues a circular, the revenue authorities cannot take advantage of a decision of the Supreme Court. The consequences of issuing a circular are that the authorities cannot act contrary to the circular. Once the circular is brought to the notice of the Court, the challenge by the revenue should be turned out and the revenue cannot lodge an appeal taking the ground which is contrary to the circular. 6. Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a deci....
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....ts can tone down the rigour of law, for an authority which wields power for its own advantage is given right to forego advantage when required and considered necessary. This power to issue circulars is for just, proper and efficient management of the work and in public interest. It is a beneficial power for proper administration of fiscal law, so that undue hardship may not be caused. Circulars are binding on the authorities administering the enactment but cannot alter the provision of the enactment, etc. to the detriment of the assessee. Needless to emphasise that a circular should not be adverse and cause prejudice to the assessee. (See : UCO Bank, Calcutta v. Commissioner of Income Tax, West Bengal - (1999)4 SCC 599. 26. In Commissioner of Central Excise, Bolpur v.Ratan Melting and Wire Industries - (2008)13 SCC 1, it has been held that circulars and instructions issued by the Board are binding on the authorities under respective statute, but when this Court or High Court lays down a principle, it would be appropriate for the Court to direct that the circular should not be given effect to, for the circulars are not binding on the Court. In the case at hand, once circula....
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....bility. It is absolutely clear that the benefit and advantage was given under the circular and not under the notification dated 07.03.1994, which was lucid and couched in different terms. The circular having been withdrawn, the contention of contemporanea exposition does not commend acceptation and has to be repelled and we do so. We hold that it would certainly not apply to the notification dated 21.01.2000." 34. We take notice of two things so far as the circular is concerned. Apart from being merely in the form of instructions or guidance to the concerned department, the circular is dated 9th October 2018, whereas the export took place on 27th July 2017. Over and above the same, the circular explains the provisions of the drawback and it has nothing to do with the IGST refund. Thus, the circular will not save the situation for the respondents. We are of the view that Rule 96 of the Rules, 2017, is very clear. 35. In view of the same, the writ-applicant isentitled to claim the refund of the IGST. 36. In the result, this writ-application succeeds and is hereby allowed. The respondents are directed to immediately sanction the refund of the IGST paid in re....